Money Management: Final Assessment.
Question 1a: Investing in a specific company. 20% of the grade, 1000 words
Choose a company in a part of the world and domain where you feel at ease with daily quotes available at http://finance.google.com and which issue dividends (e.g. you can select a component of the S&P 500, Nasdaq, SMI (Swiss Market Index) or any European market)
Describe the company, consider the recent performance (take five years) of the shares have selected. That means that you have to research the price of the chosen share five years ago and today. In addition you must establish what dividends were paid. Then using one of the techniques covered in the course (discounted cash flow or end value with dividends carried forward with a stated interest rate), establish the historical return on investment.
You can use http://finance.google.com to find the data on share price. Look under “sector summary”, select a sector you like, then a company for your research. To find data on dividends, you can look at the company web site (which is listed on the page of finance.google.com devoted to your company.
You may use other data sources is you prefer, e.g. http://bigcharts.marketwatch.com.
Question 2: An investment strategy based on funds. 65% of the grade, 3000 words
To answer this question you are to develop an investment strategy specifically for yourself, and as realistic as possible, and reflecting your view of macro-economics and its impact on financial markets.
First analyse your own situation and risk profile (character, life-style, time horizon, objectives, etc) and then your macro-economic view, which should spell out your view of global economic trends and how they affect your choice of funds.
Then, as a reflection of your risk profile and economic view, determine your asset allocation and justify it. That implies the mix of shares, bond, possibly commodities and cash. Select a portfolio of mutual funds or ETFs using examples and providers chosen from David Costa’s book. You may however also use any mutual fund or ETF available at http://funds.fm/dr-costa-best-funds for funds and http://funds.fm/dr-costa-best-etfs for ETFs.).
Normally five to seven mutual funds and ETFs funds will suffice for diversification. Bring an element of timing into your investment plan.
You are not obliged to use ETFs only or Funds only; make you choices and say why. That will require you to describe the funds and the rationale for including them in your portfolio.
Note that for this exercise you may not include stocks or bonds directly in this portfolio, only ETFs or Funds. To fully address the question you need to produce a portfolio similar to the ones presented in the textbook and the video lectures.
Question 3: Invest in a bond: 15% of the grade, 500 words
Select a government or corporate bond from these available at
(you can also use the use the search engine at http://www.six-swiss-exchange.com/bonds/explorer_en.html#srtBy=ShortName&savedHash=true)
and explain why you picked that particular bond and what your estimated return will be if you hold the bond till maturity.
N.B. As this is an academic paper, you must use the Harvard referencing system. You will be penalized for inaccurate, missing and erroneous referencing. If you are unsure on how to reference using the Harvard referencing system please review the video tutorial at